Summary of Key Points from the Conference Call Industry Overview - The report focuses on the **Chinese economy** and its macroeconomic conditions, particularly in the context of trade and policy impacts due to U.S. tariffs and domestic structural shifts [4][5]. Core Economic Insights - **Real GDP Growth**: China's real GDP growth in the first half of 2025 was **5.3% year-over-year**, surpassing expectations. The government aims for a full-year target of "around 5%" [4][5]. - **Export Performance**: Exports increased by **6.2% year-over-year** in Q2 2025 in USD terms, showing resilience despite rising tariffs. However, a decline in exports is expected in the second half of the year as tariff impacts materialize [4][10][11]. - **Growth Projections**: Sequential growth is anticipated to slow in the second half of 2025, with full-year GDP growth projected at **4.7%** and Q4 growth dropping to **4.0%** year-over-year [5][19]. Policy and Government Actions - **Policy Easing**: Policymakers are not in a rush to announce major easing measures due to solid growth in H1 2025. Recent declines in infrastructure investment indicate a lack of urgency [4][19][20]. - **15th Five-Year Plan**: Preparations for the 15th Five-Year Plan are underway, focusing on balancing productivity enhancement through technological innovation and enlarging domestic demand [4][41][42]. Property Market Dynamics - **Property Market Differences**: The current property market differs fundamentally from that of a decade ago, with a focus on managing risks rather than stimulating new construction. The demand for new urban housing is expected to remain below **5 million units per year** [26][27]. - **Quality Over Quantity**: The government's new model emphasizes improving the quality of existing housing rather than increasing the quantity, focusing on infrastructure improvements [27]. Overcapacity and Deflation Issues - **Overcapacity Problem**: China's industrial sectors face significant overcapacity, with low capacity utilization rates in industries such as cement and auto manufacturing. This has contributed to a negative GDP deflator and ongoing deflationary pressures [32][33][39]. - **Long-term Solutions**: Addressing overcapacity requires fundamental changes in the fiscal and political systems, including reforms to local government incentives [37][38]. Domestic Demand Challenges - **High Household Savings**: A high household savings rate persists due to insufficient social safety nets and low wage growth, posing challenges for boosting domestic demand [44][45]. - **Income and Confidence**: The government faces the challenge of translating higher productivity into increased income and consumer confidence, necessitating comprehensive reforms across various systems [45]. Conclusion - The Chinese economy is navigating a complex landscape of external pressures and internal structural changes. Policymakers are focused on long-term planning and stability rather than immediate stimulus, with significant implications for growth, trade, and domestic demand in the coming years [4][5][41].

Market Regulation - China's top leadership aims to curb aggressive price competition among businesses [1] - The goal is to accelerate efforts toward a unified national market [1] Economic Impact - The unified national market is intended to help boost domestic demand [1]